Chevron Global Energy Inc. - the wholly owned subsidiary of
) - has stepped into an exploration agreement with Hamilton,
). However, the financial terms of the deal were not disclosed.
Per the deal, Kosmos Energy handed 50% working interest in
Blocks 42 and 45, offshore Suriname to Chevron. Kosmos Energy -
that primarily operates in Africa and South America - will continue
to act as the operator of the blocks till the exploration activity
ends with the other 50% stake.
The deal includes the option of Chevron taking over as the
operator of the venture, if the exploration shows successful
Located about 155 miles from the capital city, Paramaribo, and
spanning over an area of about 2.8 million gross acres, the blocks
are at water depths ranging between 650 feet and 8,500 feet. The
companies plan to commence drilling in 2014.
Chevron management stated that this collaboration will broaden
the company's portfolio of assets in Latin America and will pave
way for further exploration opportunities.
San Ramon, California-based Chevron is engaged in oil and gas
exploration and production, refining and marketing of petroleum
products, manufacturing of chemicals, and other energy-related
The company, with an impressive business model, exhibits a
pipeline of large, multi-year projects. Additionally, Chevron
possesses one of the healthiest balance sheets among its peers,
which helps it to capitalize on investment opportunities with the
option to make attractive acquisitions.
Chevron's strategic initiatives -aggressive cost reduction
initiatives, exiting unprofitable markets and streamlining the
organization -are expected to have long-term positive effects for
However, due to its integrated nature, Chevron is particularly
susceptible to the downside risk from any weakness in the global
economy. We are also concerned about business risks associated with
operations in oversea areas, delays and cost overruns in various
projects and the company's high level of capital spending, which
may result in reduced returns going forward.
As such, we see the stock performing in line with the broader
market and maintain our long-term Neutral recommendation. Chevron
currently retains a Zacks #3 Rank (short-term Hold rating).
CHEVRON CORP (CVX): Free Stock Analysis Report
KOSMOS ENERGY (KOS): Free Stock Analysis Report
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